More Bad News For Autos: Wells Fargo Car Loan Originations Crash To All Time Low
by Tyler Durden
ZeroHedge.com
Oct 13, 2017
Joining the Q3 roster of banks that beat yet which all surprised investors with a cautionary red flag (for the other banks this involved a drop in FICC trading revenue and a sharp increase in loan loss reserves), moments ago Wells Fargo also reported better than expected Q3 EPS of $1.04 (exp. $1.03) which however was the result of a material 20 cent litigation accrual addback to a GAAP EPS of $0.84, indicating that management is expecting significant lawsuits in the coming months. Worse, the bank missed badly on the top line (revenue of $21.9bn vs exp. $22.4bn), but the reason why the stock has tanked by over 3% pre market is the unexpected miss in the company’s Net Interest Margin, which slumped from 2.90% to 2.87%, well below the 2.92% expected, and resulting in a lower sequential Net Interest Income number of $12.476 billion.
Not helping matters is that the company’s mortgage loan pipeline once again took a sharp leg lower. While total originations in Q3 rose to $59 billion sequentially (and down 16% Y/Y), what was more disappointing was the 27% Y/Y drop in Mortgage Applications, which declined to $73 billion in Q3, while the Mortgage Application pipeline, the most informative advance look at the state of the housing market, tumbled 42% to just $29 billion, which was just shy of lowest prints since the financial crisis.
The Rest…HERE
